Skip to comments.Apple filing claims that the DOJ's ebook lawsuit 'sides with monopoly, rather than competition'
Posted on 05/24/2012 9:50:34 AM PDT by Ernest_at_the_Beach
Just as it did in public statements, Apple's taking a strong stance in its defense against alleged price-fixing actions in concert with major ebook publishers. In US District Court filing yesterday, Apple claimed that "the Government's Complaint against Apple is fundamentally flawed as a matter of fact and law," going on to say that "Apple has not 'conspired' with anyone, was not aware of any alleged 'conspiracy' by others, and never 'fixed prices.'" Apple even acusses the government of "[siding] with monopoly, rather than competition."
All in all, it's quite the strenuous defense. Unsurprisingly, Apple claims its entry into the eBook market "spurred tremendous growth in eBook titles, range and variety of offerings, sales, and improved quality of the eBook reading experience," and says that lawsuit ignores these "inconvenient facts." As Apple tells it, the company rode in on a white horse to save the ebook industry, saying that the iBookstore "benefitted consumers" and "brought competition where none existed."
The company continues to push the issue back onto publishers, noting that "nothing Apple did reduced competition or fixed prices. As an agent, Apple did not set prices. Nor did Apple have an interest in higher prices for eBooks." Of course, Apple had its "most favored nation" clauses that requires publishers to match iBookstore prices with the lowest prices from other competitors, even where they didn't set the prices. This guaranteed that Apple would continue to have competitive pricing while still collecting its now-standard 30 percent commission on all digital goods it sells.
Apple ends its introductory statements by saying that its entry into the ebook market "is classic procompetitive conduct, and for Apple to be subject to hindsight legal attack for a business strategy well-recognized as perfectly proper sends the wrong message to the market, and will discourage competitive entry and innovation and harm consumers." This all comes in just the first two and a half pages of the 31-page document the rest goes through the DOJ's complaint paragraph by paragraph, admitting and denying claims the various claims. If it wasn't already clear, Apple isn't planning on going down without a fight, unlike several of the publishers named in the suit.
If there is no price fixing, then why (granted, my personal sample size is less than 50 eBooks) is every book I have purchased for my iPad (iBooks and Kindle software loaded) priced at EXACTLY the same price?
I mean, if the book is available through Apple and Amazon, they are priced absolutely identical, as in “to the penny”.
I thought the publisher’s set the price?
You see what happened was Amazon was selling ebooks at a loss to build and strengthen its monopoly and create a false sense of pricing in the ebook market.
Publishers didn't like this and Barnes & Noble and Apple, with competing ebook readers couldn't compete with monopolist Amazon's phony pricing schemes.
Once the agency model of pricing came in, where the publisher sets the minimum price, suddenly Barnes & Noble's Nook took 20% of the reader market and Apple's iBooks began to climb in share as well.
Having already laid waste to brick-and-mortar bookstores of all shapes and sizes, ebook monopolist Amazon's response was to complain to Holder and the DOJ spurring this asinine action.
Obama's DOJ are saying Amazon's predatory pricing scheme was good for consumers because they paid less for ebooks on Amazon Kindle than they do now with more choices and healthy competition in ebook readers and more opportunities for publishers and authors.
Apple's interest here was to ensure its iBooks users would not be subsidizing Amazon's Kindle ebook below market pricing scheme. They wanted most favored nation pricing from the publishers for access to their customers. Prices look the same because everyone is selling at the various publisher's minimum pricing point.
Moving to a perfectly legal agency model by publishers was how Amazon's monopoly grip on the ebook market was broken and how competitors like Apple and Barnes & Noble could compete in the reader market space.
Sorry, that is collusion. If we do that in my business (and it WAS done in the past) to drive out a competitor, it is illegal. Such games are very common, but to hold a press conference about it was stupid. A friend of mine speculates that one of the publishing house's did it because they were not comfortable with the deal.
One of the publishers, I forgot which one, went to the agency model but didn't sign the agreement with Apple. They are OK.
Also, the publishing world is very concerned about e publishing. They have lost control of being the gate keepers to content, and pricing. If you go to Amazon or other sites, you will find a lot of indie books that you would NEVER see if the traditional model was in place. One of my favorite authors, who is doing quite well now, was rejected for his novels because he dealt with religious themes that didn't portray Christianity as messed up. Now, Amazon does take a loss on some books. They have sales, and a rather interesting thing called the Amazon Prime Lending library. Guess what, I buy dead tree books from B&N all the time on the sale rack. They were listed originally at $15 to $29, and I pick them up for $5. Barnes and Noble took a loss on that book, and on the storage costs. That is part of doing business.